Electricity costs from renewables have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains, and growing developer experience. As a result, renewable power generation technologies have become the least-cost option for new capacity in almost all parts of the world. This new reality has been increasingly reflected in deployment, with 2019 seeing renewables account for 72% of all new capacity additions worldwide.
Renewable power generation continues to grow in 2020, despite the COVID-19 pandemic. New capacity additions in 2020, however, will be lower than the new record previously anticipated. Nonetheless, renewables steadily increasing
competitiveness, along with their modularity, rapid scalability, and job creation potential, make them highly attractive as countries and communities evaluate economic stimulus options.
Crucially, boosting investment in renewables can align short-term recovery measures with medium and long-term energy and climate sustainability goals. Solar PV and onshore wind offer easy, rapid roll-out possibilities, while offshore wind, hydropower, bioenergy, and geothermal technologies provide complementarily and cost-effective medium-term investment options.
Utility-scale solar PV’s global weighted-average LCOE fell by a precipitous 82% between 2010 and 2019, from a value of USD 0.378/kWh in 2010 to USD 0.068/kWh in 2019. This decline in LCOE was driven by the 90% reduction in module prices
between 2010 and 2019, which with declining balance-of-system (BoS) costs saw the global weighted-average total installed cost to fall by 79% over the same period.
The global weighted-average total installed cost of projects commissioned in 2019 fell below the USD 1 000/kW mark for the first time, to just USD 995/kW, 18% lower than in 2018. India leads the world, in having the lowest weighted-average total installed costs of USD 618/kW in 2019. Competitive cost structures are not confined to established markets anymore, however. Market growth in Ukraine and Viet Nam, for example, shows how PV continues to become a cost-competitive technology choice in a growing number of settings. The weighted-average total installed cost in Ukraine in 2019 was USD 874/kW, while it was USD 1 054/kW in Viet Nam. Significant country cost differences persist, however, and many markets could create significant cost reduction opportunities by moving to best practice cost structures.
For onshore wind and renewable power generally, continuous technological innovation remains a constant. The global weighted-average LCOE of onshore wind projects commissioned in 2019 fell to USD 0.053/kWh, 9% lower than in 2018 and 39%
lower than in 2010, when it was USD 0.086/kWh. Onshore wind now consistently outcompetes even the cheapest fossil fuel-fired source of new electricity, as installed costs have fallen and capacity factors increased, while costs continue to edge lower.
In 2019, the country-level weighted-average LCOE for new projects was lower than the cheapest fossil fuel-fired option in Argentina, Brazil, China, Egypt, Finland, India, Sweden and the United States.
Falling prices for onshore wind turbines – down 55-60% since 2010 – have reduced installed costs, while expanding hub heights and swept areas have boosted capacity factors at the same time as operation and maintenance (O&M) costs have fallen. The global weighted-average total installed cost of onshore wind farms thus declined by 5% in 2019, year-on-year, falling from USD 1 549/kW in 2018 to USD 1 473/kW in 2019.
Hydropower is a mature, commercially attractive renewable power generation technology. Hydropower is also uniquely placed to provide not only low-cost electricity but also cheap electricity storage and large-scale flexibility services to the grid. Between 2018 and 2019, the global weighted-average total installed cost of hydropower projects rose from USD 1 435/kW to
USD 1 704/kW. The global weighted-average LCOE of hydropower in 2019 was USD 0.047/kWh – 6% higher than in 2018 and 27% higher than in 2010. Despite the increase in global weighted-average LCOE since 2010, hydropower remains a competitive, low-cost source of electricity, with its global weighted-average LCOE still comfortably below the cheapest fossil fuel-fired source of new electricity generation.